Digital assets are a new asset class and an important part of estate planning today, when the average person has more than 130 digital accounts. Few Americans have made any plans for how these accounts will be managed if they become incapacitated or when they die. If you’ve had a colleague or a loved one who was active on social media and passed, you know how disconcerting it is to get automatically generated “updates” from them.
What is a Digital Asset?
Digital assets include any online account requiring a login and a password. Think about the bills you pay online, or the sites you visit for shopping, gaming, social posts, medical and financial portals, podcast subscriptions, streaming subscriptions, music libraries and travel rewards programs. Those are part of your digital asset portfolio.
Cryptocurrency is also a digital asset, as are NFTs –nonfungible token, digital collectables valued anywhere from hundreds to millions of dollars. And if you’re not convinced cryptocurrency is here to stay, its market value is now counted in the billions.
If you own a business and have a website, the URL for the website likely has some value. If your business records are online, those are digital assets also.
This digital asset class requires a digital solution. We have established a relationship with a trusted partner to provide our clients with a digital estate planning solution to work seamlessly with our traditional Estate Planning. We believe this is the best way for most people who want to proactively protect their digital assets and understand how having a digital asset plan, like having an estate plan, will prevent a host of problems in the near and distant future.
What’s the most important reason for digital asset planning?
Identity theft affects roughly 1 in 20 Americans every year, with total fraud losses in 2019 of nearly $17 billion, according to one major credit bureau. The number has increased dramatically as cyber identity theft has continued to grow. AARP reports that nearly 800,000 deceased individuals are targeted for identity theft annually. That's almost 2,200 a day, and this number is growing There’s even a name for it: stealing the identity of the deceased is called 'ghosting'.
Today’s identity theft takes place online and stealing the identity of the deceased is remarkably easy if no protection has been put into place. According to AARP, it can take as long as six months before financial institutions, credit reporting bureaus and even the Social Security Administration coordinate and finalized death records. It only takes a few keystrokes and a credit card number (often stolen) for a cybercriminal to purchase a Social Security number and retrieve enough information about a deceased person to steal their identity, open new credit card accounts, even take out a mortgage on the family home. In six months, your loved one’s identity can be bought and sold any number of times.
Transferring digital assets after death is a difficult task when no prior digital planning has taken place. Consider a traditional bank account. There are policies and procedures in place to accept a Power of Attorney, a paper trail of bank statements and a branch to visit or an 1-800-number to call. Lacking any paper statements, account information or passwords, how will your heirs locate your accounts?
Every now and then we read about a family desperate to salvage family photos or records from an iPhone, usually after the family has gone to court in an effort to retrieve data from a loved one’s phone. Most people are not in a position to take Apple to court, and resign themselves to the loss of photos, emails and any other assets on the phone or stored in the cloud. By preparing your digital estate plan now, your family will be able to avoid this stress and cost.
What’s in Your Digital Estate?
We suggest considering all of the financial, personal, sensitive, or private information on your device(s), including desktop computers, laptops, tablets, and cell phones:
It doesn’t take long for cybercriminals to hack into systems once they’ve learned a person has passed away.
What Kind of Legacy Will You Leave?
Here’s a problem people worry about but don’t like to discuss. You may have accounts or subscriptions you’d like to keep private. You may even have items on your devices you meant to delete but never got around to. Without proper context, revealing them could forever change how your loved ones, colleagues and those important to you will remember you. A digital asset estate plan addresses these issues as well.
Are There Work Files on Your Devices?
Depending upon the type of work you do, you may have a legal responsibility to ensure the privacy of work-related files are protected. Even if there is no legal responsibility, there may be corporate information at risk. A digital estate plan should address the secure transfer and cleaning of work files.
Protecting Your Digital Estate and Your Family
We do a lot of estate planning to protect families from needing to go through probate, which, depending upon where you live and the complexity of your estate, can take months or even years. During that time, your digital assets will remain vulnerable if you don’t take steps to protect them.
Can I Create My Own Digital Estate Plan?
Here’s the challenge you’ll face if you decide to tackle this on your own. Each online platform has different rules, processes, and requirements for your loved ones to be able to access your accounts when you are gone. Some provide the ability to name a “legacy” contact, while others simply delete your files after a certain period of inactivity. Some will never allow anyone to access your assets. You would need to create a list of all of your accounts, all of your passwords and user names, and all of the policies and procedures required by the platforms for someone to access your accounts after you have passed.
Could you do it? Yes. Is it likely you will? We’ve found most people start out with the best of intentions, but rarely follow through to the last detail. That’s why we have established a relationship with a company we trust to manage your digital assets.
For more information on how our firm offers these services to help you get your digital estate in order, please contact us to learn more.
Certified Elder Law Attorney Robert W. Haley and staff are ready to help you with estate planning and medicaid planning. Let our firm put our experience and diligent legal representation to work for you. Contact us today to learn how The Estate & Elder Law Center of Southside Virginia, PLLC can help you.